(Loss Mitigation)Treasury Representative Says 370,000 Homeowners Aided in Late 2007(Loan workouts)
Saturday, February 23, 2008
Robert Steel, the U.S. Treasury Under Secretary for Domestic Finance, told a U.S. Senate committee on Banking, Housing and Urban Affairs this week that the mortgage industry helped 370,000 homeowners in the second half of 2007, according to data provided by the HOPE NOW Alliance—a program made up of government agencies, foreclosure prevention platforms and mortgage servicers who are trying to prevent foreclosures nationwide.
“Moreover, the rate of modifications of sub-prime loans tripled from the third quarter to the fourth quarter of calendar year 2007, and even more are expected as we move forward in 2008 and the ASF framework begins to take effect,” Steel said in his official speech.
Steel added that while loan modifications and refinancing are still the best options for many homeowners, it's likely some will still lose their homes even before experiencing a rate reset on sub-prime loans.
“In fact, of the 2/28 sub-prime ARMs originated in 2005, 88-percent had not defaulted as of late last year,” Steel said. “Others, however, have stretched far beyond their means, and unfortunately, foreclosure may be unavoidable. In fact, many loans enter into foreclosure before ever reaching the reset date. A third group of homeowners facing resets falls somewhere in the middle.”
Steel said it's this middle group that needs to be identified so foreclosure prevention programs can work their magic. In terms of connecting with distressed borrowers, Steel believes the HOPE NOW Alliance has made significant progress in terms of outreach.
“Since its launch, HOPE NOW has worked to increase significantly the awareness and capacity of the HOPE Hotline – in August, the hotline was receiving an average of 625 phone calls a day; the HOPE Hotline is now receiving 4,000 new phone calls a day. That is a 540-percent increase,” Steel told the Senate Banking Committee.
Steel says, so far, the HOPE NOW Alliance has mailed out 483,000 outreach letters to delinquent borrowers. And to date, 77,000 borrowers, or 16-percent of the recipients, have responded.
“Moreover, the rate of modifications of sub-prime loans tripled from the third quarter to the fourth quarter of calendar year 2007, and even more are expected as we move forward in 2008 and the ASF framework begins to take effect,” Steel said in his official speech.
Steel added that while loan modifications and refinancing are still the best options for many homeowners, it's likely some will still lose their homes even before experiencing a rate reset on sub-prime loans.
“In fact, of the 2/28 sub-prime ARMs originated in 2005, 88-percent had not defaulted as of late last year,” Steel said. “Others, however, have stretched far beyond their means, and unfortunately, foreclosure may be unavoidable. In fact, many loans enter into foreclosure before ever reaching the reset date. A third group of homeowners facing resets falls somewhere in the middle.”
Steel said it's this middle group that needs to be identified so foreclosure prevention programs can work their magic. In terms of connecting with distressed borrowers, Steel believes the HOPE NOW Alliance has made significant progress in terms of outreach.
“Since its launch, HOPE NOW has worked to increase significantly the awareness and capacity of the HOPE Hotline – in August, the hotline was receiving an average of 625 phone calls a day; the HOPE Hotline is now receiving 4,000 new phone calls a day. That is a 540-percent increase,” Steel told the Senate Banking Committee.
Steel says, so far, the HOPE NOW Alliance has mailed out 483,000 outreach letters to delinquent borrowers. And to date, 77,000 borrowers, or 16-percent of the recipients, have responded.
